BM and JA Davis Pty Ltd and Australian Pesticides and Veterinary Medicines Authority

[2004] AATA 955

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 955

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No W2004/113

GENERAL ADMINISTRATIVE  DIVISION		)
Re		BM & JA DAVIS PTY LTD

Applicant

And AUSTRALIAN PESTICIDES & VETERINARY MEDICINES AUTHORITY

Respondent

DECISION

Tribunal Mr M J Allen, Member

Date14 September 2004

PlacePerth

Decision

The decision of the Tribunal is that:

(a)      the mineral electrode forming part of the Floatron device is an            agricultural chemical product for the purposes of the Agricultural                 and Veterinary Chemicals Code (“the Code”); and

(b)      the decision made on 17 March 2004 to issue a notice under s101 of the Code is varied by varying the notice in the manner set out in paragraph 35 of the attached reasons for decision.

.............(sgd M J Allen)...........

  Member  

CATCHWORDS

Agricultural and Veterinary Chemicals Code – recall notice – solar powered pool and spa cleaning product to be used as a sanitiser – contains sacrificial electrode made of metallic alloys –  applicant not challenging the merits of the decision to issue recall notice, but challenging whether whole product or electrode is an “agricultural chemical product”-  - electrode releases metallic ions with algaecidal and bacteriostatic effects – whole product is not an “agricultural chemical product” but the electrode is such a product – recall notice should be varied to reflect that the electrode is the subject of the notice

Agricultural and Veterinary Medicines (Administration) Act 1992

Agricultural and Veterinary Medicines Code Act 1994

Agricultural and Veterinary Medicines Code  ss 3,4,14,101,167

Administrative Appeals Tribunal Act 1975 ss 37, 41, 43

Fuller v Minister for Primary Industries & Energy, and National Registration Authority [1997] FCA 908

John Burke Ltd v Insurance Commissioner [1963] Qd R 587

National Registration Authority v Barnett & Ors [1998] FCA 488

Re Questa Pool Products Pty Ltd and APVMA and Re Katali Pty Ltd and APVMA [2004] AATA 687

Ward v Commissioner of Police (1998) 151 ALR 604

Webster v McIntosh (1980) 32 ALR 603

REASONS FOR DECISION

14 September 2004 Mr M J Allen, Member        

1.      The applicant has been the licensed distributor in Australia of an American- manufactured product known as “Floatron” since 1998.  Floatron, which has been sold in Australia for about 15 years, is promoted as being effective in limiting micro-organism growth in water in places such as swimming pools and spas.  On 17 March 2004 the respondent, which is a body established by the Agricultural and Veterinary Chemicals (Administration) Act 1992 and which was formerly known as the National Registration Authority for Agricultural and Veterinary Chemicals, made a decision under s 101 of the Agricultural and Veterinary Chemicals Code  (“the Code”) to issue a notice to the applicant requiring it to take a number of specified steps in relation to Floatron - the effect of which was to stop its further promotion or sale and the recovery of stocks of it.  The Code is set out in the Schedule to the Agricultural and Veterinary Chemicals Code Act 1994 (“the Code Act”). Subject to the limitation referred to in [20] below, the applicant now applies for a review of that decision pursuant to the right to do so conferred by s 167 of the Code.

2. On 8 April 2004 the Tribunal stayed the operation of the decision pursuant to s 41(2) of the Administrative Appeals Tribunal Act 1975 (the AAT Act) subject to certain undertakings given by the applicant.

3. The application for review was heard on 25 May 2004, the applicant being represented by Mr Beech of counsel and the respondent by Dr Renwick of counsel. The Tribunal received into evidence the documents filed pursuant to s 37 of the AAT Act as well as exhibits A1 tendered by the applicant, and R1 and R2 tendered by the respondent. Exhibit A1 is an affidavit sworn on 24 May 2004 by Mr Brian Michael Davis, a director of the applicant. Exhibit R1 was the Floatron device itself and exhibit R2 is an affidavit sworn on 18 May 2004 by Dr David Carl Loschke, who holds the position of Principal Scientist, Agricultural Chemicals with the applicant. Dr Loschke also gave oral evidence.

Statutory Framework

4.      The statutory scheme of which the Code forms part and the role of the respondent in the administration of that scheme is described in some detail in National Registration Authority v Barnett & Ors [1998] FCA 488  per Carr J and Fuller v Minister for Primary Industries & Energy, and National Registration Authority [1997] FCA 908 per French J.  The following provisions of the Code are relevant to the present proceedings. 

5.      Division 2 of Part 2 of the Code provides a system for applying for approval of active constituents for proposed or existing chemical products; for the registration of chemical products; and for the approval of labels for containers for chemical products.  Section 14 of the Code relevantly provides that the respondent must grant an application for approval or registration if it is satisfied of all the matters set out in that section, otherwise the respondent must refuse the application for registration.  The matters set out in s14(3), about which the respondent must be satisfied, are in part procedural but include also that the use of the constituent or the product in accordance with its recommended use would not  “… be an undue hazard to the safety of people exposed to it …; … be likely to have an effect that is harmful to human beings; be likely to have an unintended effect … harmful to animals, plants or things or to the environment; and … unduly prejudice trade or commerce between Australia and places outside Australia”.  The respondent must also be satisfied that the use of a chemical product in accordance with its recommended use “… would be effective according to criteria determined by the [respondent].”

6.      Part 4 of the Code regulates the supply of active constituents for chemical products and chemical products by restricting the possession of unregistered products for the purpose of supplying them; the supply of unregistered products; and the supply of registered products in contravention of any the conditions of their registration.  Division 2 of Part 4 of the Code makes it a criminal offence to possess for the purpose of supply, or to supply, unregistered chemical products.

7.      Section 101 of the Code relevantly provides that if a chemical product is not registered under the Code then the respondent may give notice to a person who has possession or custody of stocks of the product requiring the person to do one or more of the things mentioned in that section - including to stop supplying the product, to recover stocks of the product from other persons (including advertising for that purpose), and to destroy stocks of the product.

8.      Section 3 of the Code defines a “chemical product” as meaning “an agricultural chemical product or a veterinary chemical product, or both”.  The reference to a veterinary chemical product is of no relevance in the present proceedings.

9.      Section 4 of the Code “defines what is meant by an agricultural chemical product for the purposes of [the] Code”.  The section relevantly provides that:

“(2)Subject to subsections (3) and (4), an agricultural chemical product is a substance or mixture of substances that is represented, imported, manufactured, supplied or used as a means of directly or indirectly:

(a)destroying, stupefying, repelling, inhibiting the feeding of, or preventing infestation by or attacks of, any pest in relation to a plant, a place or a thing; or

(b)destroying a plant; or

(c)modifying the physiology of a plant or pest so as to alter its natural development, productivity, quality or reproductive capacity; or

(d)modifying an effect of another agricultural chemical product; or

(e)attracting a pest for the purpose of destroying it.

(3)An agricultural chemical product includes a substance or mixture of substances declared by the regulations to be an agricultural chemical product.

(4)An agricultural chemical product does not include:

(a)       a veterinary chemical product; or

(b)a substance or mixture of substances declared by the regulations not to be an agricultural chemical product”.

10.     Section 3 of the Agvet Code includes the following definitions:

pest means:

(a) in relation to an animal, plant or thing—any animal, plant or other biological entity that injuriously affects the physical condition, worth or utility of the first-mentioned animal or plant or of that thing; or

(b) in relation to a place—an animal, plant or other biological entity that injuriously affects the use or enjoyment of that place.

plant means any vegetation or fungus and includes a seed or cutting of a plant, or any other part or product of a plant.

substance includes:

(a) any gas, liquid, mixture or compound of gases, or mixture or compound of liquids; and

(b) an organism or part of an organism, including a genetically manipulated organism or part of a genetically manipulated organism; and

(c)        material that is produced from an organism; and

(d)        matter whose production involves the use of an organism;

but does not include an excluded organism or part of an excluded organism, or material that is produced from, or matter whose production involves the use of, an excluded organism.

supply includes do, or cause or permit the doing of, any of the following:

(a)       sell;

(b)       expose for sale;

(c)       send or deliver for sale or on sale;

(d)       dispose of under a hire purchase agreement;

(e)       exchange;

(f)        give;

(g)offer to do an act that would be a supply (including an act referred to in any of the above paragraphs);

thing, except where used as an object of the verb “to do”, includes:

(a)       an animal; and

(b)       information; and

(c)       a document; and

(d)       a substance.

11. For the purposes of s 4(4)(b), regulation 7(2) of the Agricultural and Veterinary Chemicals Code Regulations 1995 (“the Regulations”) provides that a substance or mixture of substances included in the classes of substances or mixtures of substances set out in Schedule 3 of the Regulations is declared not to be an agricultural chemical product. The relevant class specified in Schedule 3 is “5. Any disinfectant, mould inhibitor, air freshener or sanitiser sold by retailers, or presented or promoted primarily through retailers, to consumers for domestic use, except any sanitiser for use in swimming pools or spa water”.

The Evidence

12.     The parties were not in dispute about the essential facts of the case and the following findings of fact can be made.

13.     The Floatron device is described in its promotional material as a “solar powered water purifier”.  It is said, when used in conjunction with an oxidiser such as chlorine, to limit micro-organism growth in water.  Floatron comprises the following parts:

(a)Solar panel;

(b)Bumper;

(c)Tethering chain;

(d)Spring electrode;

(e)Mineral electrode, comprised of a mixture of copper, silver and zinc;

(f)Endcap spacer;

(g)Screen cage;

(h)Thumbscrew.

14.     Floatron floats on the water of a swimming pool or spa and sunlight on the solar panel generates a low power electrical current.  The current energises the mineral electrode, causing positively charged ions of copper and silver to be dispersed into the water.  The undisputed evidence of Dr Loschke, which I accept, is that copper ions are known to have an algaecidal effect, ie will kill algae, and silver ions have a “bacteriostatic” effect, ie they may “halt population growth in a number of types of bacteria but not necessarily kill all bacteria”.

15.     In Exhibit R2 Dr Loschke described the functions of, and the differences between, a sanitiser and an oxidiser.  A sanitiser is used to disinfect water by killing a range of harmful micro-organisms that can be introduced into the water by bathers or from external sources (such as dust and leaves).  An oxidiser (such as chlorine) is used to eliminate bather waste or other organic contaminants that react with metallic ions in the water or other sanitisers.  Oxidisers are specifically added to water to remove organic contaminants that would interfere with the sanitising action of sanitisers.  It was Dr Loschke’s opinion, and accepted by the applicant, that Floatron is represented to be, and sold as, a sanitiser rather than an oxidiser.

16.     The mineral electrode in Floatron is sacrificial in that it is consumed by dispersion into the water during electrolysis.  Floatron’s promotional material represents that the electrode has an average life of 12 – 24 months.  The electrode is supplied with the device on purchase but can also be purchased separately as a replacement item for about $70.  Replacement involves unscrewing the spent electrode and screwing the new one into the unit.

Events up to the Recall decision

17.     On 11 April 2003 the respondent wrote to the applicant in relation to the applicant’s promotion of Floatron, expressing the view that it required registration as an agricultural chemical product and informing the applicant that it should immediately cease all promotion and supply.  The respondent’s opinion regarding the registrability of Floatron was repeated in a letter of 14 May 2003 and again the applicant was informed that it should not contravene the Code by supplying or advertising an unregistered product.  In June 2003 the applicant applied to the respondent for registration of Floatron despite its view that registration was not necessary.  On 19 September 2003 the respondent issued to the applicant a permit under the Code to enable Floatron to continue to be supplied whilst the registration process proceeded.  The permit was for the period for 19 September 2003 until 18 March 2004 unless it was cancelled, suspended or surrendered prior to the latter date.  The “product” that the permit permitted the continued supply of was described as “Floatron”.

18.     The respondent cancelled the permit on 12 March 2004 and on 17 March 2004 decided to issue a recall notice under s101 of the Code.  The notice (Tp70) stated that it was issued “… in relation to all stocks of Floatron referred to as ‘the product’”.  The notice defined “the product” as meaning “all stocks of the container encasing the electrode containing copper and silver known as Floatron”.  The notice also stated that it was given on the basis that :

“(a)     the product is an agricultural chemical product;

(b)       the contains an electrode containing copper and silver;

(c)       registration of the above product as never been granted.

…

(f)[the respondent] is not satisfied, based on current scientific evidence, that silver and copper ion based swimming pool and spa pool sanitising products are effective for the control of disease causing mico-organisms that can readily grow or be transmitted in pools and spas.”

19.     In a statement of reasons dated 15 April 2004 (T2) the decision-maker stated his reasons why he “formed the view that the mineral electrode in the product known as Floatron requires registration” under the Code.  After noting that Floatron is represented as having the effects referred to in s 4(2)(a) and (c) of the Code because of the release of ions from the electrode, the decision-maker stated that he considered

“the electrode to be the defining component of the Floatron product.  Without it there can be no ionisation.  This is not altered by the fact that the promotional material for Floatron does not distinguish the electrode as a separate product from the remainder of the unit which generally comprising of the solar panel.  Nor is it altered by the fact that a low electrical current is used to release the ions from the electrode” (para 16, T Documents page 17).

The decision-maker also noted that the electrode is “a mixture of substances in the ordinary sense of that word.  It includes elemental copper and silver.  It has a definite chemical composition.  It can also be separated from the rest of the unit in that it wears out and has to be replaced with a new electrode.”  The decision-maker concluded that “Floatron, with the mineral electrode as its defining compound, is represented and most likely used for the purpose of the achieving the effects described in paras (a) and (c) of the s 4(2) definition of agricultural chemical product” and for that reason, the electrode falls within the definition of agricultural chemical product.

Issues and Contentions

20.     The issue to be determined in the proceedings is whether Floatron comprises or contains an “agricultural chemical product” for the purposes of s 4 of the Code that is required to be registered as such.  If the Tribunal determines that issue in favour of the respondent then the applicant does not wish to contest the merits of the decision to issue the recall notice.

21.     The respondent contends that it is the mineral electrode used in the Floatron device that meets the definition of an agricultural chemical product and which needs to be registered under the Code.  In paragraph 24 of the respondent’s Statement of Facts and Contentions it is contended that the electrode:

“is a substance or mixture of substances (silver and copper ions) supplied, represented and used as a means of directly or indirectly:

(a)destroying … or preventing infestation by or attacks of, any pest in relation to … a thing [namely the water in a swimming pool or spa]; or

(b)destroying a plant;

(c)modifying the physiology of a plant or pest so as to alter its natural development, productivity, quality or reproductive capacity; …”

22.     In paragraph 22 of its Statement of Facts and Contentions the respondent contends that “… there is nothing in the language of s 4 of the Code that precludes looking at the components of a “device” in order to ascertain whether it contains an agricultural chemical product that requires registration and that it would be a curious result if [such a component part of] a product were precluded from being an agricultural chemical product because its identity as such has been subsumed by a “device”.  Dr Renwick agreed at the hearing that the Floatron device as a whole was not registrable under the Code.

23.     The applicant contends that it is only the Floatron device as a whole that achieves, or is represented to achieve, the results referred to in s 4 (2)(a) (and possibly (b) and (c)) of the Code.  The electrode on its own would have no effect upon any algae or bacteria and has never been represented as such.  The electrode must be seen as part of the whole device and the whole device must be characterised as meeting the definition in s 4 – and the applicant says that it does not.  Mr Beech argued that the respondent was trying to elide the device as a whole and one of its parts – namely the electrode.  The respondent is trying to say that one part of the definition of an agricultural chemical product is satisfied by the electrode (i.e. a substance or mixture of substances) and another part of the definition is satisfied by the device as a whole (i.e. represented and used as a means of achieving certain effects).

Consideration

24.     In light of the respondent’s acknowledgement, I am satisfied that the Floatron device as a whole is not a registrable agricultural chemical as defined in the Code.  Taken as a whole, it is not a substance or a mixture of substances as defined because it includes such things as the solar panel that generates the electrical current for the electrodes.  I note that a similar conclusion was reached by Deputy President Handley, and Professor Johnston, Member, in Re Questa Pool Products Pty Ltd and APVMA and Re Katali Pty Ltd and APVMA [2004] AATA 687 at [25]. Those cases involved devices for use in swimming pools and spas that combined a sanitising process (using an electrode and ionisation similar to Floatron) and an oxidising substance. The Tribunal in those cases determined that the electrode and the oxidiser were both registrable agricultural chemical products because they are substances or a mixture of substances that are represented or used as a means to directly or indirectly achieve the effects set out in s 4(2) of the Code. In the case of the electrode the effects were achieved indirectly and in the case of the oxidiser the affects were achieved both directly and indirectly. The Tribunal noted at [20] that such a conclusion is “… in accordance with what appears to be the purpose or object of the legislation, that is regulating the use of products intended to be used in controlling pests or products being used as pesticides”.

25.     At the hearing considerable reference was made to products that, on their own and in isolation, achieved nothing – and which required some form of delivery device (such as a syringe) or other method of application.  Dr Renwick referred to a liquid pesticide in a bottle.  Sitting on a shelf it would achieve nothing – but mixed with (say) water and sprayed onto plants it would achieve the desired and intended pesticidal effect.  Similarly, a tablet or capsule that needed to be inserted into a cow’s rumen via an injection device would not achieve anything without that device.  In both cases, it was argued, the need for the delivery device or process would and should not alter the product’s characterisation as an agricultural chemical product.

26.     Mr Beech contended that the above approach was not helpful.  He distinguished between the situations described above (where the product is applied or placed in the way intended) and the situation where the product in question has no affect on its own and needs to have its characteristics altered for any effect to be achieved.  In the present case the electrode achieved nothing on its own and required an electric current to transform it – by releasing ions into the water – and it is the ions that achieve the algaecidal or bacteriocidal effects.

27.     The applicant says that the electrode itself does not satisfy the s 4(2) definition because it is ineffective in isolation and is not represented or used as the means of achieving the results referred to.  It is only part of the larger device.  The applicant has not explicitly conceded that the electrode is a “substance or mixture of substances”, but I believe it is implicit from the argument in the previous two sentences that that is the applicant’s position.

28.     In any event, I am satisfied that the electrode, is a “substance or mixture of substances” for the purposes of s 4(2).  The word “substance” is defined in s 3 inclusively rather than exhaustively.  The New Shorter Oxford English Dictionary relevantly defines “substance” as meaning “… 2. That of which a physical thing consists; the essential (esp. solid) material forming the thing … 5. A particular kind of matter, esp. one of a definite chemical composition …”.  The electrode, being made of alloys of copper, zinc and silver, satisfies that definition in my opinion.

29.     The next question to determine is whether the electrode (as opposed to Floatron as a whole) is “represented, imported, manufactured, supplied or used as a means of directly or indirectly” achieving the results set out in s 4(2).  It is clear that the Floatron as a whole meets that description.  The promotional material for Floatron, in my opinion, emphasises the part played by the electrode and the ionisation process – see page 7 of exhibit A1 and T p 45 – as the means by which the sanitising of the pools or spas is achieved.

30.     The New Shorter Oxford English Dictionary defines “directly” as meaning, relevantly, “… 4.  Without an intermediary, by a direct process …” and defines “indirectly” relevantly as meaning “… 1.  By indirect action, means or connection; through an intervening person or thing …”.

31. Clause 38 of the Explanatory Memorandum for the Bill that became the Code Act and the Code states that the “basis of the definition [of agricultural chemical product] is the purpose for which the product is used”.  I am satisfied that the electrode is used for the purpose of achieving the results referred to in at least s 4(2)(a) – albeit indirectly through being part of the total device and by the introduction of an intervening electrical current.  It follows that the electrode satisfies the definition in s 4(2) and is a registrable agricultural chemical product.

32. For completeness I should refer to a point that was raised in the proceedings. The respondent referred to the provision in reg 7 of the Regulations referred to in [11] above, suggesting that the excision of the class of products of sanitisers for use in pools and spas suggested that, but for the excision, the products within that class would have fallen within the scope of the definition in s 4(2). Mr Beech argued that as a general rule regard should not be had to regulations to construe the primary legislation – and referred to para [3.37] of Pearce & Geddes, Statutory Interpretation in Australia (5^th edition).

33.     As the learned authors point out, the general rule is that delegated legislation made under an Act should not be taken into account for the purposes of interpretation of the Act itself:  see John Burke Ltd v Insurance Commissioner [1963] Qd R 587, Webster v McIntosh (1980) 32 ALR 603. However, as the authors also point out in [3.37], there are exceptions to the general rule - one of which is identified as: “In Ward v Commissioner of Police (1998) 151 ALR 604 at 614 Moore J suggested another exception to the general rule:  if a statutory provision permits exceptions to be made to it by regulations, it may be permissible to refer to the regulations as an aid to the interpretation of the provision”.

34. In the present case s 4(3) and s 4(4) permit regulations to include and exclude respectively substances as being, or not being, agricultural chemical products. Although I have arrived at the conclusion set out in para [31] above without the need to refer to the Regulations, I am satisfied that it would have been permissible to do so had that been necessary and would support the interpretation that I have adopted.

35. Finally, I have referred above to the fact that the recall notice issued under s 101 of the Code defined “the product” subject to the recall as the Floatron device as a whole. Having determined that the device as a whole is not a registrable product but that the electrode is, it is appropriate that the decision under review be varied, pursuant to s 43(1)(b) of the AAT Act, to reflect that conclusion and to reflect certain dates in the recall notice are no longer appropriate. The terms of the recall notice dated 17 March 2004 are, therefore, varied as follows, being terms that the parties have agreed:

Paragraph               Variation

1.0  Delete the first sentence and replace with:

“This notice is issued in relation to all stocks of the copper-silver   electrode supplied with, or for use with, the product known as   Floatron”.

2.0  Delete the definition of “the Product” and replace with

“’The Product’ means all stocks of the copper-silver electrode   supplied with, or for use with, the product known as Floatron.”

4.2 & 5.3                   delete “18 March” and insert “17 September”.

6.1(c)  delete “19 March” and insert “21 September”.

7.1  delete “24 March” and insert “17 September”.

7.2  delete “16 April” and insert “21 September”.

7.2(c)  delete “17 March” and insert “17 September”.

Attachment 1           Under the heading “Product Information”, delete the sentence   “FLOATRON comprising a container encasing the electrode   containing copper and silver” and insert “The copper- silver   electrode supplied with, or for use with, the product known as   Floatron”.

Under the heading “Advice to Customers”, delete “Floatron” and  insert “the Product”.

Attachment 2           Under the heading “Product Information”, delete the sentence   “FLOATRON comprising a container encasing the electrode   containing copper and silver” and insert “The copper- silver   electrode supplied with, or for use with, the product known as   Floatron”.

Under the heading “Remedial Action to Customers”, delete “Floatron” and insert “the Product”.

I certify that the 35 preceding paragraphs are a true copy of the reasons for the decision herein of Mr M J Allen, Member

Signed:         .................(sgd V Wong)...............................
  Associate

Date/s of Hearing  25 May 2004
Date of Decision  14 September 2004
Counsel for the Applicant         Mr A Beech
Solicitor for the Applicant          Ilberys
Counsel for the Respondent     Dr J Renwick

Solicitor for the Respondent     Ms K Battison